Stocks stumbled in the final minutes of trading to end near session lows Tuesday, with the Dow and S&P posting their fourth-straight session in the red, as investors remained cautious amid uncertainties surrounding central bank's stimulus program and budget discussions in Washington.

"We enter the day after the S&P 500 finished giving back all of last week's Fed induced euphoria [on Monday]," wrote Peter Bookvar, managing director at The Lindsey Group. "It's very unusual action considering how so much of the year's gains have been driven by the help of QE. We've either reached a point where the market can't keep using the same excuse to rally with the same effectiveness or we assume that the taper is coming soon anyway."

Investec analyst described the "Fed flustering" as a "very bad one-sided baseball game."

"Bernanke threw a massive curveball with a surprise no taper on Wednesday saying any scale back would be data dependent," the analysts wrote in a note on Tuesday. "(On Monday) it was Dudley and Fisher off the benches, throwing dovish and hawkish fastballs just to confuse us all a bit more. The world series of mixed messages isn't over quite yet however, we have nine more Fed speakers on the mound before the week is out."

Meanwhile, Cleveland Federal Reserve President Sandra Pianalto did not comment on the current outlook for the economy or monetary policy in her prepared remarks at a payments symposium hosted by the Chicago Federal Reserve.

Concerns over the debt ceiling lingered ahead of the October 1 deadline for Congress to pass a resolution to keep the government funded. If a deal is not struck, it could force a partial shutdown of the government.

"We're going to tread water until Washington figures out what to do," said Brian Battle, vice president of trading at Performance Trust Capital Partners. "They'll likely wait until the last minute and the political solution seems to be to kick the can down the road."

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CNBC's Steve Liesman explains why stocks have given up gains following last week's Fed meeting. And Jonathan Krinsky, Miller Tabak, breaks down worrisome technical signals he is seeing in the market.

Among earnings, Lennar advanced after the homebuilder posted better-than-expected earnings as it sold more homes at higher prices. Other homebuilders were in positive territory, including Ryland, KBHome and Toll Brothers.

Carnival fell sharply after the cruise operator warned it could post a loss for the current quarter after reporting a 30-percent decline in its third-quarter earnings.

Facebook rallied to hit a record high after Hong Kong newspaper South China Morning Post reported that the social-networking giant, Twitter and other websites deemed sensitive and blocked by the Chinese government will be accessible in a planned free-trade zone (FTZ) in Shanghai. Earlier, Citi upgraded the Internet stock to "buy" from "neutral," citing the sustainability of recent increases in growth even amid initial uncertainty about an increasing shift to mobile use.

Apple climbed after at least four brokerages lifted their price targets on the tech giant. On Monday, Apple said that sales for its new iPhone had set a record, with consumers snapping up nine million smartphones within the first few days of its launch.

Applied Materials spiked to lead the S&P 500 gainers after the chipmaking equipment producer said it will acquire rival Tokyo Electron in an all-share deal, creating a company with a combined market value of $29 billion.

On the economic front, home prices climbed 0.6 percent in July, according to the S&P/Case-Shiller composite index of 20 metropolitan areas. Compared to a year earlier, prices were up 12.4 percent, matching economists' expectations and marking the strongest rise since February 2006.

"The recovery in housing has been an important source of support for the U.S. economy, with residential investment adding to real GDP (gross domestic product) growth for eight consecutive quarters," said Barclays analysts Hamish Pepper and Cagdas Aksu in a note on Monday.

Meanwhile, the consumer confidence index declined slightly in September to 79.7 from a revised 81.8 in August, according to the Conference Board. Economists polled by Reuters expected a reading of 79.9.

Treasury prices gained after the government auctioned $33 billion in 2-year notes at a high yield of 0.348 percent. The bid-to-cover ratio, an indicator of demand, was 3.09.